French premium department store chain Galeries Lafayette plans to tap into China's increasingly affluent consumer base by cooperating with Hong Kong-based fashion retailer I.T Limited to launch its first department store in Beijing.
The planned opening, slated for around 2014, marks the year China is expected to be named the world's top luxury-goods consumer.
The joint venture, in which both firms will each own a 50 percent stake, announced Friday that its first Galeries Lafayette department store will be opened in Beijing by the end of 2014, with I.T investing a maximum of HK$150 million ($19.35 million) prior to opening.
Additional department store openings will follow suit in other major cities including Shanghai, Chengdu, Shenzhen and Macao, said an announcement filed to the stock exchange of Hong Kong.
The century-old Lafayette has more than 60 department stores in France, Germany and Dubai and is well known by wealthy Chinese consumers. Its 10-story flagship store located in Paris is a key shopping destination for Chinese travelers to the city.
"The store is always full of Chinese tourists, and shop assistants are mostly Chinese," said Bai Ling, a 26-year-old resident in Shenzhen who previously lived in Paris.
"China's nouveau rich prefer time-honored brands and Lafayette is optimistic of China's high-end market," said Yan Jun, president of Ecole Fashion and Luxury Consulting (Beijing). "Cooperation with I.T could help ease Lafayette's entry into the Chinese market."
Fashion houses such as Emporio Armani, Versace and Longchamp have recently launched stores in Beijing's Sanlitun Village North Plaza.
Ecole Fashion and Luxury Consulting's Yan said both Lafayette and I.T face challenges both in choosing the right store locations as well as selecting brands suited to Chinese consumers' tastes. "Lafayette's (commercial venture) failed in Asian markets such as Japan and South Korea in the 1990s, and I.T has no experience running department stores," he said.
